According to Nikkei Asia’s article published on October 20, 2022, the yen weakened past 150 against the dollar on Thursday, reaching a new 32-year low as the policy gap widens between the Bank of Japan and the U.S. Federal Reserve.
The Fed has repeatedly raised interest rates to tackle inflation, while the Bank of Japan maintains its ultraloose monetary policy to support the economy.
The Fed's hawkish monetary policy, along with persistent inflation expectations, has pushed the benchmark 10-year U.S. Treasury yield up to 4%. The Bank of Japan, meanwhile, is continuing to hold the 10-year Japanese government bond yield near zero. The yield gap is prompting investors to invest in dollars rather than yen, exerting strong downward pressure on the Japanese currency.
On Sept. 22, the Japanese government and the Bank of Japan intervened in the foreign exchange market for the first time in 24 years to shore up the yen after it hit 145 per dollar. Since then, investors have been on the lookout for more yen-buying, causing occasional hiccups in the foreign exchange market.
As the yen has fallen below the original intervention level, expectations for further intervention have grown.
In April 1990, the yen fell below 160 against the greenback.
